Labor Midterm Cases

8/11/2019 Labor Midterm Cases

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1 |S E L E C T E D C A S E S O N L A B O R S T A N D A R D S

BASIC PRINCIPLES

SINGER SEWING MACHINE VS. NLRC, 193 SCRA 271

FACTS:The respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of

all collectors of the Singer Sewing Machine Company, Baguio City branch. The Company opposed thepetition mainly on the ground that the union members are actually not employees but are independentcontractors as evidenced by the collection agency agreement which they signed.

ISSUE: Whether or not the collection agreement agency was correct that the Union members were nottheir employees

HELD:The present case mainly calls for the application of the control test, which if not satisfied, would lead usto conclude that no employer-employee relationship exists. Hence, if the union members are notemployees, no right to organize for purposes of bargaining, nor to be certified as such bargaining agentcan ever be recognized. The following elements are generally considered in the determination of theemployer-employee relationship; "(1) the selection and engagement of the employee; (2) the payment ofwages; (3) the power of dismissal; and (4) the power to control the employee's conduct although thelatter is the most important elementThe Agreement confirms the status of the collecting agent in this case as an independent contractor notonly because he is explicitly described as such but also because the provisions permit him to performcollection services for the company without being subject to the control of the latter except only as to theresult of his work. The plain language of the agreement reveals that the designation as collection agentdoes not create an employment relationship and that the applicant is to be considered at all times as anindependent contractor.The requirement that collection agents utilize only receipt forms and report forms issued by the Companyand that reports shall be submitted at least once a week is not necessarily an indication of control overthe means by which the job of collection is to be performed. The agreement itself specifically explainsthat receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent

with the money collected on behalf of the Company. Likewise, the use of standard report forms as well asthe regular time within which to submit a report of collection are intended to facilitate order in officeprocedures. Even if the report requirements are to be called control measures, any control is only withrespect to the end result of the collection since the requirements regulate the things to be done after theperformance of the collection job or the rendition of the service.The monthly collection quota is a normal requirement found in similar contractual agreements and is sostipulated to encourage a collecting agent to report at least the minimum amount of proceeds.The last and most important element of the control test is not satisfied by the terms and conditions of thecontracts. There is nothing in the agreement which implies control by the Company not only over the endto be achieved but also over the means and methods in achieving the end.The last and most important element of the control test is not satisfied by the terms and conditions of thecontracts. There is nothing in the agreement which implies control by the Company not only over the endto be achieved but also over the means and methods in achieving the end

The Court finds that since private respondents are not employees of the Company, they are not entitledto the constitutional right to join or form a labor organization for purposes of collective bargaining.Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition fordirect certification.

MANILA GOLF CLUB, vs. IAC 237 SCRA 207

FACTS:This was a petition of seventeen (17) persons who styled themselves "Caddies of Manila Golf and CountryClub-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended,"PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical, CommercialEmployees Association," with which the petitioners claimed to be affiliated. The petition alleged inessence that although the petitioners were employees of the Manila Golf and Country Club, a domesticcorporation, the latter had not registered them as such with the SSS.The respondent Club, alleging in substance that the petitioners, caddies by occupation, were allowed intothe Club premises to render services as such to the individual members and guests playing the Club's golfcourse and who themselves paid for such services; that as such caddies, the petitioners were not subjectto the direction and control of the Club as regards the manner in which they performed their work; andhence, they were not the Club's employees.

ISSUE:


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Whether or Not there was an employer-employee relationship between the petitioning caddies and therespondent Club.

HELD:The Court does not agree that said facts necessarily or logically point to such a relationship, and to theexclusion of any form of arrangements, other than of employment, that would make the respondent's

services available to the members and guest of the petitioner.As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress,language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribethe actions or judgment of the caddies concerned as to leave them little or no freedom of choicewhatsoever in the manner of carrying out their services. In the very nature of things, caddies mustsubmit to some supervision of their conduct while enjoying the privilege of pursuing their occupationwithin the premises and grounds of whatever club they do their work in. For all that is made to appear,they work for the club to which they attach themselves on sufference but, on the other hand, alsowithout having to observe any working hours, free to leave anytime they please, to stay away for as longthey like. It is not pretended that if found remiss in the observance of said rules, any discipline may bemeted them beyond barring them from the premises which, it may be supposed, the Club may do in anycase even absent any breach of the rules, and without violating any right to work on their part. All theseconsiderations clash frontally with the concept of employment.

It seems to the Court, however, that the intendment of such fact that the Club suggests the rate of feespayable by the players to the caddies is to the contrary, showing that the Club has not the measure ofcontrol over the incidents of the caddies' work and compensation that an employer would possess.The Court agrees with petitioner that the group rotation system so-called, is less a measure of employercontrol than an assurance that the work is fairly distributed, a caddy who is absent when his turn numberis called simply losing his turn to serve and being assigned instead the last number for the day.By and large, there appears nothing in the record to refute the petitioner's claims.

ENCYCLOPEDIA BRITANNICA VS. NLRC, 264 SCRA 4

FACTS:Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannicaand was in charge of selling petitioners products through some sales representatives. As compensation,private respondent received commissions from the products sold by his agents. He was also allowed touse petitioners name, goodwill and logo. It was, however, agreed upon that office expenses would bededucted from private respondents commissions. Petitioner would also be informed about appointments,promotions, and transfers of employees in private respondents district.On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Thenon October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica with theDepartment of Labor and Employment, claiming for non-payment of separation pay and other benefits,and also illegal deduction from his sales commissions.

ISSUE: WON Limjoco is entitled to receive separation and other benefits granted to employees.

HELD:In determining the existence of an employer-employee relationship the following elements must bepresent: 1) selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and4) the power to control the employees conduct. Of the above, control of employees conduct iscommonly regarded as the most crucial and determinative indicator of the presence or absence of anemployer-employee relationship.[3]Under the control test, an employer-employee relationship existswhere the person for whom the services are performed reserves the right to control not only the end tobe achieved, but also the manner and means to be used in reaching that end.There was a need for the petitioner to issue memoranda to private respondent so that the latter would beapprised of the company policies and procedures. Nevertheless, private respondent Limjoco and theother agents were free to conduct and promote their sales operations. The periodic reports to thepetitioner by the agents were but necessary to update the company of the latters performance andbusiness income.

Private respondent was not an employee of the petitioner company. While it was true that the petitionerhad fixed the prices of the products for reason of uniformity and private respondent could not alter them,the latter, nevertheless, had free rein in the means and methods for conducting the marketingoperations. He selected his own personnel and the only reason why he had to notify the petitioner aboutsuch appointments was for purpose of deducting the employees salaries from his commissions.Private respondent was merely an agent or an independent dealer of the petitioner. He was free toconduct his work and he was free to engage in other means of livelihood.
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CARUNGCONG VS. SUNLIFE, 283 SCRA 319

FACTS:Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life AssuranceCompany of Canada (hereinafter Sun Life). The contract set out in detail the terms and conditions

particularly those concerning the commissions payable to her under which her relationship with thecompany would be governed. This contract was superseded some five years later when she signed two(2) new agreements. The first, denominated "Career Agent's (or Unit Manager's) Agreement," dealt withsuch matters as the agent's commissions, his obligations, limitations on his authority, and termination ofthe agreement by death, or by written notice "with or without cause." It declared that the "Agent shall bean independent contractor and none of the terms of . . (the) Agreement shall be construed as creating anemployer-employee relationship." The second was titled, "MANAGER'S Supplementary Agreement."Making explicit reference to the first, said second contract explicitly described as a "further agreement" contained provisions regarding remuneration (overriding commissions in accordance with a fixedschedule), limitation of authority, and termination of the agreement inter aliaby written notice "withoutcause."Subsequently, Carungcong and Sun Life executed another Agreement "made and effective as ofJanuary 1, 1986" by which the former was named New Business Managerwith the function generally

"to manage a New Business Office established by the latter to obtain applications for life insurancepolicies and other products offered by or distributed through Sun Life and to perform such other duties inconnection therewith as Sun Life may require from time to time." 4 The Agreement governed suchmatters as the New Business Manager's duties; limitations on authority; compensation; expenses;termination of relation, by among others, notice in writing with or without cause. Like the "Career Agent's(or Unit Manager's) Agreement" first signed by Carungcong, this latest Agreement stressed that the"New Business Manager in performance of his duties defined herein, shall be considered an independentcontractor and not . . an employee of Sun Life," and that "(u)nder no circumstance shall the NewBusiness Manager and/or his employees be considered employees of Sun Life."Respondent had been receiving reports of anomalies in relation to special fund availments from unitmanagers and agents. Carungcong was confronted with and asked to explain the discrepancies set out inthe report.

ISSUE: WON there existed an employer-employee relationship between Caruncong and Sunlife?

HELD:Carungcong was an independent contractor and not an employee of Sun Life.The contracts she had willingly and knowingly signed with Sun Liferepeatedly and clearly provided thatsaid agreements were terminable by either party by written notice with or without cause.Noteworthy is that this last agreement of January 1, 1986 emphasized, like the "Career Agent's (or UnitManager's) Agreement" first signed by her,44 that in the performance of her duties defined herein.Carungcong would be considered an independent contractor and not . . an employee of Sun Life," andthat "(u)nder no circumstance shall the New Business Manager and/or his employees be consideredemployees of Sun Life."

RAMOS VS. CA, 380 SCRA 467

FACTS:Petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an operationfor the removal of a stone in her gall bladder (cholecystectomy). She was referred to Dr. Hosaka, asurgeon, who agreed to perform the operation on her. The operation was scheduled for June 17, 1985at 9:00 in the morning at private respondent De Los Santos Medical Center (DLSMC). Since neitherpetitioner Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosakarecommended to them the services of Dr. Gutierrez.Petitioner Erlinda was admitted to the DLSMC the day before the scheduled operation. By 7:30 in themorning of the following day, petitioner Erlinda was already being prepared for operation. At around 9:30in the morning, Dr. Hosaka had not yet arrived. By 10:00 in the morning, when Dr. Hosaka was still not

around, petitioner Rogelio already wanted to pull out his wife from the operating room. Dr. Hosaka finallyarrived at the hospital at around 12:10 in the afternoon, or more than three (3) hours after the scheduledoperation.Dr. Gutierrez was trying to intubate the patient. Dr. Hosaka instructed someone to call Dr. Calderon,another anesthesiologist. When he arrived, Dr. Calderon attempted to intubate the patient. The nailbedsof the patient remained bluish. At almost 3:00 in the afternoon, Erlinda being wheeled to the IntensiveCare Unit (ICU). The doctors explained to petitioner Rogelio that his wife had bronchospasm. Erlindastayed in the ICU for a month. She was released from the hospital only four months later or on


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November 15, 1985. Since the ill-fated operation, Erlinda remained in comatose condition until she diedon August 3, 1999.

ISSUE: Whether or not respondents De los Santos Medical Center and Drs. Orlino Hosaka and PerfectaGutierrez are solidarily liable for the injury suffered by petitioner Erlinda

HELD:There is no employer-employee relationship between DLSMC and Drs. Gutierrez and Hosaka which wouldhold DLSMC solidarily liable for the injury suffered by petitioner Erlinda.The admission of a physician to membership in DLSMCs medical staff as active or visiting consultant isfirst decided upon by the Credentials Committee thereof, which is composed of the heads of the variousspecialty departments such as the Department of Obstetrics and Gynecology, Pediatrics, Surgery with thedepartment head of the particular specialty applied for as chairman. The Credentials Committee thenrecommends to DLSMC's Medical Director or Hospital Administrator the acceptance or rejection of theapplicant physician, and said director or administrator validates the committee'srecommendation. Similarly, in cases where a disciplinary action is lodged against a consultant, the sameis initiated by the department to whom the consultant concerned belongs and filed with the EthicsCommittee consisting of the department specialty heads. The medical director/hospital administratormerely acts as ex-officio member of said committee.

Neither is there any showing that it is DLSMC which pays any of its consultants for medical servicesrendered by the latter to their respective patients. Moreover, the contract between the consultant inrespondent hospital and his patient is separate and distinct from the contract between respondenthospital and said patient. The first has for its object the rendition of medical services by the consultantto the patient, while the second concerns the provision by the hospital of facilities and services by its staffsuch as nurses and laboratory personnel necessary for the proper treatment of the patient.Further, no evidence was adduced to show that the injury suffered by petitioner Erlinda was due to afailure on the part of respondent DLSMC to provide for hospital facilities and staff necessary for hertreatment.

SONZA VS ABS-CBN, G.R. NO. 138051, JUNE 10, 2004

FACTS:Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") withthe Mel and Jay Management and Development Corporation ("MJMDC") wherein the agreement involvedproviding SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreementlisted the services SONZA would render to ABS-CBN. ABS-CBN agreed to pay for SONZAs services amonthly talent fee of P310,000 for the first year and P317,000 for the second and third year of theAgreement.

On April 1996, Sonza wrote a letter to ABS-CBM President Eugenio Lopez III about a recent eventconcerning his programs and career, and that the said violation of the company has breached theagreement, thus, the notice of rescission of Agreement was sent.On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor andEmployment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his

salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowanceand amounts due under the Employees Stock Option Plan ("ESOP").

ISSUE: WON an employer-employee relationship existed between Sonza and ABS-CBN.

HELD:Case law has consistently held that the elements of an employer-employee relationship are:Selection and Engagement of Employee.ABS-CBN engaged SONZAs services to co-host its television andradio programs because of SONZAs peculiar skills, talent and celebrity status. Independent contractorsoften present themselves to possess unique skills, expertise or talent to distinguish them from ordinaryemployees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebritystatus not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of anindependent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity

status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired himthrough its personnel department just like any other employee.

Payment of Wages.ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going toMJMDC. All the talent fees and benefits paid to SONZA were the result of negotiations that led to theAgreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate onbenefits such as "SSS, Medicare, 13th month pay" which the law automatically incorporates into everyemployer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of


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an employer-employee relationship. SONZAs talent fees, amounting toP317,000 monthly in the secondand third year, are so huge and out of the ordinary that they indicate more an independent contractualrelationship rather than an employer-employee relationship. The power to bargain talent fees way abovethe salary scales of ordinary employees is a circumstance indicative, but not conclusive, of anindependent contractual relationship.Power of Dismissal. For violation of any provision of the Agreement, either party may terminate their

relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other thanbreach of contract, such as retrenchment to prevent losses as provided under labor laws. During the lifeof the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as "AGENT and Jay Sonza shallfaithfully and completely perform each condition of this Agreement." Even if it suffered severe businesslosses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talentfees during the life of the Agreement. This circumstance indicates an independent contractual relationshipbetween SONZA and ABS-CBN.

Power of Control. First,ABS-CBN did not exercise control over the means and methods of Sonzas work.ABS-CBN was not involved in the actual performance that produced the finished product of SONZAswork. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right tomodify the program format and airtime schedule "for more effective programming."34ABS-CBNs soleconcern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise

control over the means and methods of performance of SONZAs work. Even if ABS-CBN was completelydissatisfied with the means and methods of SONZAs performance of his work, or even with the quality orproduct of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do isnot to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.

ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue payingin full SONZAs talent fees, did not amount to control over the means and methods of the performance ofSONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and methods ofperformance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work,whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent feesin full until the expiry of the Agreement.

ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs.However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed toperform his job. What SONZA principally needed were his talent or skills and the costumes necessary forhis appearance. Even though ABS-CBN provided SONZA with the place of work and the necessaryequipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control hiswork. ABS-CBNs sole concern was for SONZA to display his talent during the airing of the programs.Second, ABS-CBN did not subject Sonza to its rules and standards of performance. The Agreementstipulates that SONZA shall abide with the rules and standards of performance "covering talents" of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performanceprescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreementrefers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), whichhas been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to

broadcasters, not to employees of radio and television stations. Broadcasters are not necessarilyemployees of radio and television stations. Clearly, the rules and standards of performance referred to inthe Agreement are those applicable to talents and not to employees of ABS-CBN. In any event, not allrules imposed by the hiring party on the hired party indicate that the latter is an employee of theformer. In this case, SONZA failed to show that these rules controlled his performance. We find thatthese general rules are merely guidelines towards the achievement of the mutually desired result, whichare top-rating television and radio programs that comply with standards of the industry.Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even anindependent contractor can validly provide his services exclusively to the hiring party. In the broadcastindustry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespreadand accepted practice in the entertainment industry. This practice is not designed to control the meansand methods of work of the talent, but simply to protect the investment of the broadcast station. Thebroadcast station normally spends substantial amounts of money, time and effort "in building up its

talents as well as the programs they appear in and thus expects that said talents remain exclusive withthe station for a commensurate period of time." Normally, a much higher fee is paid to talents who agreeto work exclusively for a particular radio or television station. In short, the huge talent fees partiallycompensates for exclusivity, as in the present case.


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LAZARO VS. SOCIAL SECURITY COMMISSION, 435 SCRA 472 [2004]

FACTS:Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC for social securitycoverage and remittance of unpaid monthly social security contributions against her three (3) employers.Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star

Marketing (Royal Star), which is engaged in the business of selling home appliances. Laudato allegedthat despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 toMarch of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsorycoverage or remit Laudatos social security contributions.

Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was amere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato wasnot subjected to definite hours and conditions of work. As such, Laudato could not be deemed anemployee of Royal Star.

ISSUE: WON Laudato was an employee of Royal Star.

HELD:Laudato was an employee of Royal Star. The fact that Laudato was paid by way of commission does not

preclude the establishment of an employer-employee relationship. Neither does it follow that a personwho does not observe normal hours of work cannot be deemed an employee. Laudato was a salessupervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of thecompany, and thus was subject to the control of management as to how she implements its policies andits end results. Laudatos calling cards from Royal Star indicate that she is indeed a sales supervisor.Laudato was an employee of Royal Star is supported by substantial evidence which includes the cashvouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a SalesSupervisor of the company,and Certificates of Appreciation issued by Royal Star to Laudato inrecognition of her unselfish and loyal efforts in promoting the company. In the case at bar, there is noshowing that Royal Star was similarly precluded from exerting control or interference over the manner bywhich Laudato performed her duties.

PHIL. GLOBAL COMMUNICATION VS. DE VERA, 459 SCRA 260 [2005]

FACTS:Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business ofcommunication services and allied activities, while respondent Ricardo De Vera is a physician byprofession whom petitioner enlisted to attend to the medical needs of its employees. The parties agreedand formalized respondents proposal in a document denominated as retainership contract which will befor a period of one year subject to renewal.

The turning point in the parties relationship surfaced in December 1996 when Philcom, thru aletter bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informedDe Vera of its decision to discontinue the latters retainers contract with the Company effective at the

close of business hours of December 31, 1996 because management has decided that it would be morepractical to provide medical services to its employees through accredited hospitals near the companypremises. De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission(NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981and was dismissed without due process.

ISSUE: Whether an employer-employee relationship exists between petitioner and respondent.

HELD:Applying the four-fold test to this case, we initially find that it was respondent himself who sets theparameters of what his duties would be in offering his services to petitioner borne in a letter.Significantly, the letter was substantially the basis finding that there existed no employer-employeerelationship between petitioner and respondent in addition to the fact that the complainant was not

considered an employee was recognized by the complainant himself in a signed letter to the respondent.The tenor of this letter indicates that the complainant was proposing to extend his time with therespondent and seeking additional compensation for said extension. This shows that the respondentPHILCOM did not have control over the schedule of the complainant as it [is] the complainant who isproposing his own schedule and asking to be paid for the same. This is proof that the complainantunderstood that his relationship with the respondent PHILCOM was a retained physician and not as anemployee. If he were an employee he could not negotiate as to his hours of work.


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It was not disputed by respondent, that from the time he started to work with petitioner, he never wasincluded in its payroll; was never deducted any contribution for remittance to the Social Security System(SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for hisprofessional fee, in accordance with the National Internal Revenue Code, matters which are simplyinconsistent with an employer-employee relationship.

Finally, remarkably absent from the parties arrangement is the element of control, whereby theemployer has reserved the right to control the employee not only as to the result of the work done butalso as to the means and methods by which the same is to be accomplished. Here, petitioner had nocontrol over the means and methods by which respondent went about performing his work at thecompany premises. He could even embark in the private practice of his profession, not to mention thefact that respondents work hours and the additional compensation therefore were negotiated upon bythe parties. In fine, the parties themselves practically agreed on every terms and conditions ofrespondents engagement, which thereby negates the element of control in their relationship.

ABS-CBN VS. NAZARENO, G.R. NO. 164156, SEPT. 26, 2006

FACTS:ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production

assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radioprograms in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issuedABS-CBN employees identification cards and were required to work for a minimum of eight hours a day,including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercialbroadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate,arrange personalities for air interviews; c)Coordinate, prepare schedule of reporters for scheduled newsreporting and lead-in or incoming reports; d)Facilitate, prepare and arrange airtime schedule for publicservice announcement and complaints; e) Assist, anchor program interview, etc; and f)Record, logclerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA)to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused torecognize PAs as part of the bargaining unit, respondents were not included to the CBA.Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio operationswould be handled by the studio technician. There was a revision of the schedule and assignments andthat respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly toLeo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and13thMonth Pay with Damages against the petitioner before the NLRC.

ISSUE: WON the respondents are regular employees.

HELD:

Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to allregular employees.Where a person has rendered at least one year of service, regardless of the nature of the activityperformed, or where the work is continuous or intermittent, the employment is considered regular aslong as the activity exists. The reason being that a customary appointment is not indispensable beforeone may be formally declared as having attained regular status. Article 280 of the Labor Code provides:

REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstandingand regardless of the oral agreement of the parties, an employment shall be deemed to be regular where theemployee has been engaged to perform activities which are usually necessary or desirable in the usual business ortrade of the employer except where the employment has been fixed for a specific project or undertaking thecompletion or termination of which has been determined at the time of the engagement of the employee or wherethe work or services to be performed is seasonal in nature and the employment is for the duration of the season.

Any employee who has rendered at least one year of service, whether continuous or intermittent, isdeemed regular with respect to the activity performed and while such activity actually exists. The factthat respondents received pre-agreed talent fees instead of salaries, that they did not observe therequired office hours, and that they were permitted to join other productions during their free time arenot conclusive of the nature of their employment. They are regular employees who perform severaldifferent duties under the control and direction of ABS-CBN executives and supervisors.


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There are two kinds of regular employees under the law: (1) those engaged to perform activitieswhich are necessary or desirablein the usual business or trade of the employer; and (2)those casualemployees who have rendered at least one year of service, whether continuous or broken, withrespect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities

performed in relation to the particular trade or business taking into account all the circumstances, and insome cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the ff:(1)In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity statuswas required from them because they were merely hired through petitioners personnel department justlike any ordinary employee;(2) The so-called talent fees of respondents correspond to wages given as aresult of an employer-employee relationship. Respondents did not have the power to bargain for hugetalent fees, a circumstance negating independent contractual relationship; (3) Petitioner could alwaysdischarge respondents should it find their work unsatisfactory, and respondents are highly dependent onthe petitioner for continued work; (4)The degree of control and supervision exercised by petitioner overrespondents through its supervisors negates the allegation that respondents are independent contractors.The presumption is that when the work done is an integral part of the regular business of

the employer and when the worker, relative to the employer, does not furnish anindependent business or professional service, such work is a regular employment of suchemployee and not an independent contractor.

FRANCISCO VS. NLRC, 500 SCRA 690 [06]

FACTS:Petitioner was hired by Kasei Corporation during the incorporation stage. She was designated as

accountant and corporate secretary and was assigned to handle all the accounting needs of the company.She was also designated as Liason Officer to the City of Manila to secure permits for the operation of thecompany.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitmentof all employees and perform management administration functions. In 2001, she was replaced by LizaFuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was untilSeptember. She asked for her salary but was informed that she was no longer connected to thecompany. She did not anymore report to work since she was not paid for her salary. She filed an actionfor constructive dismissal with the Labor Arbiter.

ISSUE: WON there was an employer-employee relationship.

HELD:Petitioner is an employee of Kasei Corporation. In addition to the standard of right-of-control, the

existing economic conditions prevailing between the parties, like the inclusion of the employee in thepayrolls, can help in determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employerspower to control the employee with respect to the means and methods by which the work is to beaccomplished; and (2) the underlying economic realities of the activity or relationship.

Thus, the determination of the relationship between employer and employee depends upon thecircumstances of the whole economic activity, such as: (1) the extent to which the services performedare an integral part of the employers business; (2) the extent of the workers investment in eq uipmentand facilities; (3) the nature and degree of control exercised by the employer; (4) the workersopportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for thesuccess of the claimed independent enterprise; (6) the permanency and duration of the relationshipbetween the worker and the employer; and (7) the degree of dependency of the worker upon theemployer for his continued employment in that line of business. The proper standard of economic

dependence is whether the worker is dependent on the alleged employer for his continued employmentin that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporationbecause she was under the direct control and supervision of Seiji Kamura, the corporations TechnicalConsultant. It is therefore apparent that petitioner is economically dependent on respondent corporationfor her continued employment in the latters line of business.


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Even simple negligence is not subject to blanket release in favor of establishments like hospitals but mayonly mitigate liability depending on the circumstances.When a person needing urgent medical attentionrushes to a hospital, he cannot bargain on equal footing with the hospital on the terms of admission andoperation. Such a person is literally at the mercy of the hospital. There can be no clearer example of acontract of adhesion than one arising from such a dire situation. Thus, the release forms of CMC cannotrelieve CMC from liability for the negligent medical treatment of Corazon.

COCA-COLA BOTTLERS PHILS. VS. DR. CLIMACO, G.R. NO. 146881, FEBRUARY 15, 2007

FACTS:Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtueof a Retainer Agreement for a period of 1 year with a monthly salary of Three Thousand Eight Hundred(P3,800.00).The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expiredon December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued toperform his functions as company doctor to Coca-Cola until he received a letter from petitioner companyconcluding their retainership agreement effective 30 days from receipt thereof.Petitioner was already making inquiries regarding his status with the company. First, he wrote a letter

addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership,Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer ofCoca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having served the company continuously for four (4) years. He likewise stated thatrespondent must receive all the benefits and privileges of an employee under Article 157 (b) of the LaborCode.

ISSUE: WON there existed an employer-employee relationship between Coca-Cola and Dr. Climaco.

HELD:No employer-employee relationship exists between the parties. The Court, in determining the existence ofan employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection andengagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the powerto control the employees conduct, or the so-called "control test," considered to be the most importantelement.

The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over theperformance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive MedicalPlan, which contains the respondents objectives, duties and obligations, does not tell respondent "how toconduct his physical examination, how to immunize, or how to diagnose and treat his patients, employeesof Coca-Cola, in each case."

The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved,but did not control the means and methods by which respondent performed his assigned tasks. It isprecisely because the company lacks the power of control that the contract provides that respondent

shall be directly responsible to the employee concerned and their dependents for any injury, harm ordamage caused through professional negligence, incompetence or other valid causes of action.

Complainant does not dispute the fact that outside of the two (2) hours that he is required to be atrespondent companys premises, he is not at all further required to just sit around in the premises andwait for an emergency to occur so as to enable him from using such hours for his own benefit andadvantage. In fact, complainant maintains his own private clinic attending to his private practice in thecity, where he services his patients, bills them accordingly -- and if it is an employee of respondentcompany who is attended to by him for special treatment that needs hospitalization or operation, this issubject to a special billing. More often than not, an employee is required to stay in the employersworkplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his ownpurpose.

CALAMBA MEDICAL CENTER VS. NLRC ET. AL.,G.R. NO. 176484, NOV. 25, 2008

FACTS:Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week ontwenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident


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physicians were also given a percentage share out of fees charged for out-patient treatments, operatingroom assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's medicaldirector Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow

employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Mercedithawas not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed acomplaint for illegal suspension and Dr. Merceditha for illegal dismissal.

ISSUE: WON there existed an employer-employee relationship between petitioner and the spouses-respondents.

HELD:Drs. Lanzanas are declared employee by the petitioner hospital. Under the "control test," anemployment relationship exists between a physician and a hospital if the hospital controls both the meansand the details of the process by which the physician is to accomplish his task.That petitioner exercised control over respondents gains light from the undisputed fact that in theemergency room, the operating room, or any department or ward for that matter, respondents' work is

monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consentof petitioner or its medical director, no operations can be undertaken in those areas. For control test toapply, it is not essential for the employer to actually supervise the performance of duties of theemployee, it being enough that it has the right to wield the power.With respect to respondents' sharing in some hospital fees, this scheme does not sever the employmenttie between them and petitioner as this merely mirrors additional form or another form of compensationor incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of theLabor Code.Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of whichcover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior,and offenses against persons, property and the hospital's interest.More importantly, petitioner itself provided incontrovertible proof of the employment status ofrespondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Formswhich reflect their status as employees, and the classification as "salary" of their remuneration. Moreover,it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture thatmandatory coverage under the SSS Law is premised on the existence of an employer-employeerelationship, except in cases of compulsory coverage of the self-employed.

ESCASIAS, ET. AL. VS. SHANGRILA-LAS MACTAN ISLAND RESORT, ET. AL.,G.R. NO. 178827, MARCH 4, 2009

FACTS:Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and

1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondentShangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint forregularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13thmonth pay differential against respondents, claiming that they are regular employees of Shangri-la.Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, thatArticle 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment toemploy health personnel, that the services of nurses is not germane nor indispensable to its operations,and that respondent doctor is a legitimate individual contractor who has the power to hire, fire andsupervise the work of nurses under her.

ISSUE: Whether or not there exists an employer-employee relationship between Shangri-la and

petitioners.

HELD:The Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la providesthe clinic premises and medical supplies for use of its employees and guests do not necessarily prove thatrespondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic andprovision of medical services to its employees is required under Art. 157, which are not directly related toShangri-las principal business operation of hotels and restaurants.


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As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSScontributions and other benefits of the staff; group life, group personal accident insurance and life/deathinsurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, aswell as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely

that respondent doctor would report petitioners as workers, pay their SSS premium as well as theirwages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that adocument, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctorexists, to which petitioners gave their conformity and in which they acknowledged their co-terminusemployment status. It is thus presumed that said document, and not the employee manual beingfollowed by Shangri-las regular workers, governs how they perform their respective tasks andresponsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is notpetitioners employer.

TONGKO VS. MANUFACTURER LIFE INSURANCE CO. (PHILS), INC., ET. AL.,G.R. NO. 167622, JANUARY 25, 2011

FACTS:The case arose from a complaint for illegal dismissal with various claims filed by Tongko against Manulife.Tongko alleged that he was an employee of the company since the latter exercised control overhim. Manulife claims otherwise insisting that he was an agent.

ISSUE: WON an employer-employee relationship exist.

HELD:The Supreme Court held that if the specific rules and regulations that are enforced against insuranceagents or managers are such that would directly affect the means and methods by which such agents ormanagers would achieve the objectives set by the insurance company, they are employees of theinsurance company.

Applying said standard, the Court held that Tongko was an employee of Manulife since the latter had thepower of control over the former. The Court accorded much weight on the various codes of conduct thatTongko had to observe pursuant to the agency agreement. It held: Thus, with the company regulationsand requirements alone, the fact that Tongko was an employee of Manulife may already be established.Certainly, these requirements controlled the means and methods by which Tongko was to achieve thecompanys goals. More importantly, Manulifes evidence establishes the fact that Tongko was tasked toperform administrative duties that establishes his employment with Manulife.

In short, the Supreme Court ruled in favor of Tongko which prompted Manulife to file its Motion for

Reconsideration. In disposing of this Motion for Reconsideration, the Supreme Court placed heavysignificance on the application of the Civil Code and Insurance provisions on agency. The originalAgreement of Tongko with the company dictates that he is an insurance agent. No other documentaryevidence was found to support subsequent stipulations as to their relationship that would negate theagency, and not employment, relationship on the original agreement.It was found by the Court that Tongko declared himself as business or self-employed person in hisincome tax return. In a sense, an independent contractor. This bolsters the content of the Agreementmentioned above that he was an insurance agent in the context of the Insurance Code and the CivilCode. To the Court, this aspect of the evidence was not considered in its original decision, which hadthey been given importance, would have changed the decision as it is an admission against interest onthe part of Tongko.

Another principle that surfaced here is the concept of estoppel. Tongkos previous admissions in several

years of tax returns as an independent agent, as against his belated claim that he was all along anemployee, are too diametrically opposed to be simply dismissed or ignored.

As to the value of the Code of Conduct relied upon by Tongko in claiming that he is an employee, theCourt posits: What, to Tongko, serve as evidence of labor law control are the codes of conduct thatManulife imposes on its agents in the sale of insurance. The mere presentation of codes or of rules andregulations, however, is not per se indicative of labor law control as the law and jurisprudence teach us.


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As already recited above, the Insurance Code imposes obligations on both the insurance company and itsagents in the performance of their respective obligations under the Code, particularly on licenses andtheir renewals, on the representations to be made to potential customers, the collection of premiums, onthe delivery of insurance policies, on the matter of compensation, and on measures to ensure ethicalbusiness practice in the industry.

The general law on agency, on the other hand, expressly allows the principal an element of control overthe agent in a manner consistent with an agency relationship. In this sense, these control measurescannot be read as indicative of labor law control. Foremost among these are the directives that theprincipal may impose on the agent to achieve the assigned tasks, to the extent that they do not involvethe means and manner of undertaking these tasks. The law likewise obligates the agent to render anaccount; in this sense, the principal may impose on the agent specific instructions on how an accountshall be made, particularly on the matter of expenses and reimbursements. To these extents, control canbe imposed through rules and regulations without intruding into the labor law concept of control forpurposes of employment.The Court further held that a commitment to abide by the rules and regulations of an insurance companydoes not ipso facto make the insurance agent an employee. Neither do guidelines somehow restrictive ofthe insurance agents conduct necessarily indicate control as this term is defined in jurisprudence.Guidelines indicative of labor law control, should not merely relate to the mutually desirable result

intended by the contractual relationship; they must have the nature of dictating the means or methods tobe employed in attaining the result, or of fixing the methodology and of binding or restricting the partyhired to the use of these means. In fact, results-wise, the principal can impose production quotas andcan determine how many agents, with specific territories, ought to be employed to achieve thecompanys objectives. These are management policy decisions that the labor law element of controlcannot reach. Thus, as will be shown more fully , Manulifes codes of conduct, all of which do not intrudeinto the insurance agents means and manner of conducting their sales and only control them as to thedesired results and Insurance Code norms, cannot be used as basis for a finding that the labor lawconcept of control existed between Manulife and Tongko.

Thus, the Court did not see the existence of such relationship and reversed its earlier ruling whichgranted Tongko millions in backwages and damages, among others.

CAONG, JR.,VS. BEGUALOS,GR NO. 179428, JAN. 26, 2011

Petitioners namely Primo E. Caong, Alexander Tresquio and Loriano Daluyon are employed by hereinrespondent as drivers by his jeepneys under a boundary agreement. On November 2001, they filedseparate complaints alleging illegal dismissal for failure to remit exact amount of daily boundary fee.

During the mandatory conference, respondent manifested that petitioners were not dismissed and couldstill drive his jeepneys as long as the arrears are paid. Petitioners refused to do so. Petitioners allegedthat they were illegally dismissed and were not afforded due process when they were dismissed withoutnotice. They contended that (a) they were not afforded due process, (b) there was no just cause for thedismissal and that (c) there was a disregard that there are days when the full amount of boundary cannot

be raised due to the scarcity of passengers.

Respondent in his defense mentioned that the petitioners were lessees of his jeepneys and they have notbeen paying the full amount of the jeepneys rental. He added that on November 4, he gathered all hislessees and told them that effective November 5, those that would fail to pay the full payment of therental will not be allowed to rent his jeepneys. He further informed his lessees that his jeepneys wereacquired on instalment basis and that the lease the drivers are paying him are necessary for the monthlyamortization of said jeeneys. However, despite this, petitioners did not pay arrears amounting to 10,315.00, 10,760.00 d 6,890.00. He stressed that he would renew contract with the petitioners as long asthe petitioners pay the arrears incurred.The Labor Arbiter and the National Labor Relations Commission decided in favour of respondentdismissing case and upholding that what was implemented was merely a sanction to the drivers forfailure to pay lease or rental. This was affirmed by the Court of Appeals. In its decision it said that the

employer-employee relationship was not severed but merely suspended. At the same time, the driverscan return to work upon fulfilment of the condition that the arrears is paid.

Ruling:It has been settled that the relationship between jeepney owners/operators and drivers under theboundary system is that of an employer-employee and not lessor-lessee. This is not negated by the factthat the drivers do not receive a fixed amount but only based on the excess of the so called boundary.


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The employer-employee relationship was not severed but was only temporarily suspended. Respondentspolicy of suspending drivers who fail to remit the full amount of their boundary was fair and reasonable.

It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate allaspects of employment, including the prerogative to instill discipline on his employees and to imposepenalties, including dismissal, if warranted, upon erring employees. This is a management prerogative.

Indeed, the manner in which management conducts its own affairs to achieve its purpose is within themanagement's discretion. The only limitation on the exercise of management prerogative is that thepolicies, rules, and regulations on work-related activities of the employees must always be fair andreasonable, and the corresponding penalties, when prescribed, commensurate to the offense involvedand to the degree of the infraction. (Caong, Jr. v. Regualos, G.R. No. 179428, January 26, 2011)

ATOK BIG WEDGE COMPANY, VS. JESUS P. GISONG.R. NO. 169510, AUGUST 8, 2011

Respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by Atok Big WedgeCompany through its Assistant Vice President and Acting Assistant Vice Manager Rutillo Torres. As aconsultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters

pertaining to the prosecution of cases against illegal surface occupants within the area covered by thecompany's mineral claims. Respondent was likewise tasked to perform liaison work with severalgovernment agencies, which he said was his expertise. However, respondent was not required to reportin the office on a regular basis unless needed by the company in relation to his being a consultant. He ispaid 3,000 php a month of which was delivered in his residence or to him through a meeting in arestaurant. A retainer agreement was executed between parties but such agreement cannot be found.Such arrangement lasted for eleven (11) years.

Dispute between parties arose when petitioner refused to register respondent with the Social SecuritySystem. This resulted to petitioner, through his resident manager Cera, issued a memorandum advisingrespondent that within 30 days from receipt thereof, the retainer contract is terminated since services ofGison is no longer needed.

As a result thereof, herein respondent filed an action against petitioner for illegal dismissal, unfair laborpractice, underpayment of wages, non-payment of 13thmonth pay, vacation pay and sick leave pay withtheNational Laor Relations CommissionRegional Arbitration Branch.

In his petition, respondent alleged that he started by assisting the company in relation to their 700 millioncrop damage case. It was agreed that there was no employer-employee relationship but upontermination of the case, he however continued to take charge of some liaison matters and public relationson behalf of Atok. Because of the length of his service, he invited the attention of the top officers of thecompany saying that he is already entitled of benefits due to an employee. This was ignored by themanagement. Despite that, he continued to represent company and was even enjoying the privilege ofsecuring interest free salary loans through salary deduction.

The Labor Arbiter and the NLRC decided in favor of herein petitioner stating that there was no employer-employee relationship. Herein respondent, under Rule 65, appealed case in the Court of Appeals. CAreversed ruling of the Labor Arbiter and the NLRC ordering herein petitioner to reinstate respondent andto pay him full backwages inclusive of allowances and other benefits of their monetary equivalentcomputed from the time these were withheld from him up to the time of his actual and effectivereinstatement.

The Court of Appeals in its decision opined that the NLRC and the Labor Arbiter may have overlookedArticle 280 of the Labor Code which distinguishes two kinds of employees regular and casualemployees. In consideration of the eleven (11) years of service rendered by herein respondent, he isdeemed entitled of the rights and privileges of a regular employee.

Issue:

Whether or not an employer-employee relationship exists between petitioner and the respondent.

Ruling:In determining whether an employer-employee relationship exists, jurisprudence adheres to the four-foldtest: (1) selection of employee; (2) payment of wages; (3) the power of dismissal; and (4) the power tocontrol employees conduct. Among the four, the last or the control test is the most controlling. In it, theemployer has the power to control the employee not only in relation to the end product but as to themeans and manner of achieving the end.


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Based on the circumstances, there was no employer-employee relationship. Respondent was not requiredto report everyday and payment was done only at his residence or the local restaurant. At the same time,respondent may be given tasks to perform but these tasks were to be performed according to his ownmeans and method. Respondent even admit that there was a prior agreement that there will be noemployer-employee relationship between them.

Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee ofpetitioner. The appellate court's premise that regular employees are those who perform activities whichare desirable and necessary for the business of the employer is not determinative in this case. In fact,any agreement may provide that one party shall render services for and in behalf of another, no matterhow necessary for the latter's business, even without being hired as an employee.Considering that there is no employer-employee relationship between the parties, the termination ofrespondent's services by the petitioner after due notice did not constitute illegal dismissal warranting hisreinstatement and the payment of full backwages, allowances and other benefits.

MARTICIO SEMBLANTE and DUBRICK PILAR, vs. COURT OF APPEALS, 19TH DIVISION, nowSPECIAL FORMER 19TH DIVISION,

GALLERA DE MANDAUE/SPOUSES VICENTE and MARIA LUISA LOOT,G.R. No. 196426. August 15, 2011.

Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired byrespondents-spouses Vicente and Maria Luisa Loot, as the official masiador and sentenciador, of Galleriala Mandaue, a cockpit sometime in 1993.

As masiador and sentenciador, Semblante receives PhP2,000 per week or a total of PhP8,000 per month,while Pilar gets PhP3,500 a week or PhP14,000 per month. They work every Tuesday, Wednesday,Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays.Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the

morning depending on the needs of the cockpit. Petitioners had both been issued employees'identification cards and have been conscious of the cockpit rules and regulations. However, on November14, 2003, petitioners were denied entry into the cockpit and were informed that they are alreadyterminated of their services immediately effective. This prompted petitioners to file a complaint for illegaldismissal against respondents.

In answer, respondents denied that petitioners were their employees and alleged that they wereassociates of respondents' independent contractor, Tomas Vega. Respondents claimed that petitionershave no regular working time or day and they are free to decide for themselves whether to report forwork or not on any cockfighting day. And lastly, IDs are merely issued so that they can access thecockpit without mixing with the general public.

The Labor Arbiter in its Decision dated June 16, 2004, ruled that petitioners are regular employees of

respondents as they performed work necessary and indispensable to the usual trade or business ofrespondents. It was added that petitioners were illegally dismissed by herein petitioner and thus entitledwith backwages and separation pay.

Upon respondents Motion for Reconsideration, the NLRC held in its Resolution of October 18, 2006 thatthere was no employer-employee relationship between petitioners and respondents - respondents havingno part in the selection and engagement of petitioners, and that no separate individual contract withrespondents was ever executed by petitioners.

Petitioners via petition for certiorari file in the appellate court arguing that there was a grave abuse ofdiscretion on the part of the NLRC. The Court of Appeals however affirmed the decision of NLRC.

Issue: Whether or Not there was an employer-employee relationship between parties?

Ruling:There is no employer-employee relationship.

Applying the four-fold test in determining whether there is an employer-employee relationship, it is ruledthat petitioners are NOT employees of respondents. This can be adduced through the following:

1.

Respondents had no part in petitioners' selection and management;


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2. Petitioners' compensation was paid out of the arriba (which is a percentage deducted from thetotal bets), not by petitioners; and

3. Petitioners performed their functions as masiador and sentenciador free from the direction andcontrol of respondents.

Thus, respondents, not being petitioners' employers, could never have dismissed, legally or illegally,

petitioners, since respondents were without power or prerogative to do so.

JOSE MEL BERNARTE, vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA),JOSE EMMANUEL M. EALA, and PERRY MARTINEZ,

G.R. No. 192084. September 14, 2011

Complainants (Jose Mel Bernarte and Renato Guevarra) alleged that they were invited to becomereferees in the PBA. During the leadership of Commissioner Emilio Bernardino, they were made to signcontracts on a year-to-year basis. However such terms were changed upon the administration ofCommissioner Eala.

Both petitioners have not been allowed to sign their contract on managements basis that they have been

performing unsatisfactorily.

The Labor Arbiter declared petitioners as employees dismissed illegally. Accordingly, the Labor Arbiterordered the reinstatement of petitioner and the payment of backwages, moral and exemplary damagesand attorney's fees. This was affirmed by the NLRC.

Respondents filed a petition for certiorari with the Court of Appeals, which overturned the decisions ofthe NLRC and Labor Arbiter. The Court of Appeals found petitioner an independent contractor sincerespondents did not exercise any form of control over the means and methods by which petitionerperformed his work as a basketball referee.

Issue:Whether or Not there is an employer-employee relationship among parties

Ruling:No, there is no employer-employee relationship.

In this case, PBA admits repeatedly engaging petitioner's services, as shown in the retainer contracts.PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainercontract.

The following circumstances indicate that petitioner is an independent contractor: (1) the referees arerequired to report for work only when PBA games are scheduled, which is three times a week spread overan average of only 105 playing days a year, and they officiate games at an average of two hours pergame; and (2) the only deductions from the fees received by the referees are withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours per day for five daysa week, petitioner is required to report for work only when PBA games are scheduled or three times aweek at two hours per game. In addition, there are no deductions for contributions to the Social SecuritySystem, Philhealth or Pag-Ibig, which are the usual deductions from employees' salaries. Theseundisputed circumstances buttress the fact that petitioner is an independent contractor, and not anemployee of respondents.

Generally, "if an employer has the right to control and direct the work of an individual, not only as to theresult to be achieved, but also as to details by which the result is achieved, an employer/employeerelationship is likely to exist."

A position that requires special skills and independent judgment weights in favor of independent

contractor status. . . . Unskilled work, on the other hand, suggests an employment relationship. Inaddition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is anemployee of the former. For a hired party to be considered an employee, the hiring party must havecontrol over the means and methods by which the hired party is to perform his work, which is absent inthis case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contractbetween PBA and petitioner, and highlights the satisfactory services rendered by petitioner warrantingsuch contract renewal. Conversely, if PBA decides to discontinue petitioner's services at the end of theterm fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions of


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the contract, or for whatever other reason, the same merely results in the non-renewal of the contract,as in the present case. The non-renewal of the contract between the parties does not constitute illegaldismissal of petitioner by respondents.

LIRIO VS. GENOVIAG.R. No. 169757, November 23, 2011

Facts:

Respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad SonicmixRecording Studio for illegal dismissal, non-payment of commission and award of moral and exemplarydamages.

Respondent Genovia alleged in his position paper that on August 15, 2001, he was hired as studiomanager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). He was employed tomanage and operate Celkor and to promote and sell the recording studio's services to music enthusiastsand other prospective clients. He received a monthly salary of P7,000.00. They also agreed that he wasentitled to an additional commission of P100.00 per hour as recording technician whenever a client usesthe studio for recording, editing or any related work. He was made to report for work from Monday to

Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of thetime, he still rendered eight hours of work or more. All the employees of petitioner, including respondent,rendered overtime work almost everyday, but petitioner never kept a daily time record to avoid payingthe employees overtime pay.

He also alleged that petitioner approached him and told him about his project to produce an album forhis daughter, Celine Mei Lirio. Petitioner asked respondent to compose and arrange songs for Celine andpromised that he (Lirio) would draft a contract to assure respondent of his compensation for suchservices. As agreed upon, the additional services that respondent would render included composing andarranging musical scores only, while the technical aspect in producing the album, such as digital editing,mixing and sound engineering would be performed by respondent in his capacity as studio manager forwhich he was paid on a monthly basis. Petitioner instructed respondent that his work on the album ascomposer and arranger would only be done during his spare time, since his other work as studiomanager was the priority. Respondent then started working on the album.

After the album was completed and released, respondent again reminded petitioner about the contracton his compensation as composer and arranger of the album. Petitioner told respondent that since hewas practically a nobody and had proven nothing yet in the music industry, respondent did not deserve ahigh compensation, and he should be thankful that he was given a job to feed his family. Petitionerinformed respondent that he was entitled only to 20% of the net profit, and not of the gross sales of thealbum, and that the salaries he received and would continue to receive as studio manager of Celkorwould be deducted from the said 20% net profit share. Respondent objected and insisted that he beproperly compensated. On March 14, 2002, petitioner verbally terminated respondents services, and hewas instructed not to report for work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds, andno hearing was conducted before he was terminated, in violation of his constitutional right to dueprocess. Having worked for more than six months, he was already a regular employee. Although he wasa so called studio manager, he had no managerial powers, but was merely an ordinary employee.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he bepaid separation pay, backwages and overtime pay; and that he be awarded unpaid commission forservices rendered as a studio technician as well as moral and exemplary damages.

Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which wascertified correct by petitioner, and Petty Cash Voucher evidencing receipt of payroll payments byrespondent from Celkor.

In defense, petitioner stated in his Position Paper that respondent was not hired as studio manager,composer, technician or as an employee in any other capacity of Celkor. Respondent could not have beenhired as a studio manager, since the recording studio has no personnel except petitioner.

According to petitioner, respondent had no track record as a composer, and he was not known in thefield of music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to co-produce the album.


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Petitioner asserted that his relationship with respondent is one of an informal partnership and that he hadno control over the time and manner by which respondent composed or arranged the songs, except onthe result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon.Hence, petitioner contended that no employer-employee relationship existed between him and therespondent, and there was no illegal dismissal to speak of.

The Labor Arbiter rendered a decision finding that an employer-employee relationship existed betweenpetitioner and respondent, and that respondent was illegally dismissed.

However, the NLRC reversed and set aside the decision of the Labor Arbiter on the ground thatrespondent failed to prove his employment tale with substantial evidence. It held that respondent failedto proved with substantial evidence that he was selected and engaged by petitioner, that petitioner hadthe power to dismiss him, and that they had the power to control him not only as to the result of hiswork, but also as to the means and methods of accomplishing his work.

The Court of Appeals rendered a decision reversing and setting aside the resolution of the NLRC, andreinstating the decision of the Labor Arbiter.

Issue:

Whether respondent is an employee of the petitioner, which in turn determines whether respondent wasillegally dismissed.

Ruling:

The Supreme Court affirmed the assailed decision of the Court of Appeals.

Before a case for illegal dismissal can prosper, it must first be established that an employer-employeerelationship existed between petitioner and respondent.

The elements to determine the existence of an employment relationship are: (a) the selection andengagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) theemployers power to control the employees conduct. The most important element is the employerscontrol of the employees conduct, not only as to the result of the work to be done, but also as to themeans and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an employee ofpetitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15,2002) certified correct by petitioner, which showed that respondent received a monthly salary ofP7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with thecorresponding deductions due to absences incurred by respondent; and (2) copies of petty cash

vouchers, showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid monthlywages of P7,000.00. Petitioner wielded the power to dismiss as respondent stated that he was verballydismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner.The power of control refers merely to the existence of the power. It is not essential for the employer toactually supervise the performance of duties of the employee, as it is sufficient that the former has aright to wield the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that hewould help and teach respondent how to use the studio equipment. In such case, petitioner certainly hadthe power to check on the progress and work of respondent.

On the other hand, petitioner failed to prove that his relationship with respondent was one ofpartnership. Such claim was not supported by any written agreement. The Court notes that in the payroll

dated July 31, 2001 to March 15, 2002, there were deductions from the wages of respondent for hisabsence from work, which negates petitioners claim that the wages paid were advances for respondentswork in the partnership.

The Court agrees with the Court of Appeals that the evidence presented by the parties showed that anemployer-employee relationship existed between petitioner and respondent.


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In termination cases, the burden is upon the employer to show by substantial evidence that thetermination was for lawful cause and validly made.Article 277 (b) of the Labor Code puts the burden ofproving that the dismissal of an employee was for a valid or authorized cause on the employer, withoutdistinction whether the employer admits or does not admit the dismissal. For an employees dismissal tobe valid, (a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process.Procedural due process requires the employer to furnish an employee with two written notices before the

latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which hissought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal,to be issued after the employee has been given reasonable opportunity to answer and to be heard on hisdefense. Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctlyaffirmed the Labor Arbiters finding that respondent was illegally dismissed, and entitled to the paymentof backwages, and separation pay in lieu of reinstatement.

JAO VS. BCC PRODUCT SALES INC.,G.R. NO. 163700, APRIL 18, 2012

Facts:Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, Terrance

Ty, employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 tohandle the financial aspect of BCCs business. On October 19,1995, the security guards of BCC, actingupon the instruction of Ty, barred him from entering the premises of BCC where he then worked. Hisattempts to report to work in November and December 12, 1995 were frustrated because he continuedto be barred from entering the premises of BCC. He then filed a complaint for illegal dismissal,reinstatement with full backwages, non-payment of wages, damages and attorneys fees.

Respondents countered that petitioner was not their employee but the employee of Sobien FoodCorporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as itscomptroller in BCC to oversee BCCs finances and business operations and to look after SFCs interests orinvestments in BCC.

Issue:Whether or not an employer-employee relationship existed between petitioner Jao and BCC

Ruling:The Supreme Court speaking through Justice Bersamin declared that the court cannot side withpetitioner.

In determining the presence or absence of an employer-employee relationship, the Court hasconsistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control theemployee on the means and methods by which the work is accomplished. The last element, the so-calledcontrol test, is the most important element.Hereunder are some of the circumstances and incidents occurring while petitioner was supposedlyemployed by BCC that debunked his claim against respondents. It can be deduced from the March 1996affidavit of petitioner that respondents challenged his authority to deliver some 158 checks to SFC.

Considering that he contested respondents challenge by pointing to the existing arrangements betweenBCC and SFC, it should be clear that respondents did not exercise the power of control over him, becausehe thereby acted for the benefit and in the interest of SFC more than of BCC.

LEGEND HOTEL (MANILA) V. REALUYO,G.R. NO. 153511, JULY 18, 2012

Respondent averred that he had worked as a pianist at the Legend Hotel's Tanglaw Restaurant fromSeptember 1992 with an initial rate of P400.00/night that was given to him after each night'sperformance; that his rate had increased to P750.00/night; and that during his employment, he couldnot choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six

times/week. He added that the Legend Hotel's restaurant manager had required him to conform withthe venue's motif; that he had been subjected to the rules on employees' representation checks and

chits, a privilege granted to other employees; that on July 9, 1999, the management had notified himthat as a cost-cutting measure his services as a pianist would no longer be required effective July30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as

of the filing of his complaint; and that the loss of his employment made him bring his complaint. |||

Ruling:The issue of whether or not an employer-employee relationship existed between petitioner andrespondent is essentially a question of fact. 9 The factors that determine the issue include who has the


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power to select the employee, who pays the employee's wages, who has the power to dismiss theemployee, and who exercises control of the methods and results by which the work of the employee isaccomplished. 10 Although no particular form of evidence is required to prove the existence of therelationship, and any competent and relevant evidence to prove the relationship may be admitted, 11 afinding that the relationship exists must nonetheless rest on substantial evidence, which is that amount ofrelevant evidence that a reasonable mind might accept as adequate to justify a conclusion. 12

Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts.However, where, like here, there is a conflict between the factual findings of the Labor Arbiter and theNLRC, on the one hand, and those of the CA, on the other hand, it becomes proper for the factual issuesand to look into the records of the case and re-examine the questioned findings. 13

A review of the circumstances reveals that respondent was, indeed, petitioner's employee. He wasundeniably employed as a pianist in petitioner's Madison Coffee Shop/Tanglaw Restaurant fromSeptember 1992 until his services were terminated on July 9, 1999. EAISDH

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